People seem to understand that things have fluctuating prices based on supply and demand (like stocks, or gold, or ice cream). But when it comes to event tickets people ignore the realities of supply and demand and talk about fairness. Anyone who tries to sell tickets for a profit is greedy. Or, as Nine Inch Nails’ Trent Reznor says today, ticket resellers are parasites.
People pay big dollars for premium events like the Super Bowl and certain concerts. But they pay it to middle man ticket brokers, lovingly referred to as scalpers. Ticket brokers are really just market makers. They risk capital, hold inventory, and place bets that they’ll be able to make a living on the spread.
Pricing tickets is very, very hard. Demand for an event peaks just before it occurs, then falls to zero as it begins, like food that has gone bad. Changes in the economy have a dramatic impact on ticket prices, too. A good ticket broker is thinking about the quality of the event, the date of the event, the venue, the seat locations and the state of the local economy when pricing tickets. And if they do it wrong, they eat their inventory and take a loss.
Most ticket brokers don’t make much money, particularly when you factor in that they’re putting their own capital at risk. A few, those that have good instincts and the right connections, do very well.
But it’s important to know that everyone is in on the game. Players and coaches who go to the Super Bowl sell their tickets to brokers. Venues sell some of (or all of) their best seats to popular events to brokers. The artists do the same. Everyone along the supply chain gets their cut. Usually in cash, which isn’t claimed as income.
The only people taking any risk are the brokers, who put their money on the line. And when an event turns sour, they take the hit.
The benefit to the artists and promoters is clear – brokers create a smooth demand curve for tickets. When an event doesn’t do well, no one feels bad for the brokers. But when tickets for a hot event go for four or five times the face value of a ticket, everyone points to the brokers and says they’re greedy. What they don’t realize is that the broker has paid so many people along the way for those tickets, they’re probably only making a 10% margin on their investment. And that’s when things go well.
In a past life I was the COO of a Kleiner Perkins backed ticket reseller called Razorgator, so I know a lot about this business. And I also know that nobody’s hands are clean.
Reznor wants to kill the secondary ticket business, which is very noble and no doubt popular with his fans. But what he doesn’t talk about is the fact that with any scarce good a market price develops, and there is no way to avoid it. Putting legal or logistical restrictions on ticket resales just means that people pay in other ways, usually by waiting in line. That means people who value their time the least spend the time waiting.
Generally speaking, giving assets to people who are willing to wait around the longest is an inefficient way to allocate resources. But for some artists it makes sense because they want to reward their core base of young fans, most of whom can’t compete on price for tickets.
So the artists will keep complaining about the secondary ticket market to keep those fans happy. Even while they reap the direct and indirect benefits of that secondary market.
I’ve never understood why tickets have fixed prices, why not auction them off in blocks like EasyJet does with airline seats?
auctions are great, but they have to be conducted in advance of the event, and often prices don’t peak until day of.
also, both fear and greed drive ticket sales. the artists are first concerned with selling as many tickets as possible to avoid a loss. once they know it’s a good event, they want to maximize revenue. But it’s hard to do both. that’s where the brokers come in.
I would like to bring something to attention. Ticket sales for events is one of the only things that didn’t get cheaper with the internet. It’s more convenient, but much more expensive.
The internet helped lower prices of travelling, buying products, calling family and friends, and so on.
But as far as ticket sales go, it’s a monopoly and they charge unfair extra charges.
What happened to the ticket selling charges being part of the ticket price? What is building facility charge that ticketmaster loves to charge? Are we paying for their buildings?
If there is any extra charge should be only 1 convenience charge and it should be more than 10% of face value.
Anybody agrees with me here?
Thanks
Totally agree!
Michael Arrington says “…people pay in other ways, usually by waiting in line.” Waiting in line? I don’t have to stay in line. I would buy online if Ticket Master wouldn’t add they’re 20% plus $8 to pick up the tickets at the will call window.
Besides, where I grew up music stores were selling concert tickets at cost. They were interested in people getting into the store. It must have worked because they still do it.
Totally disagree. You don’t price something based on what it costs. You price based on what people will pay.
Further, it makes sense to charge *more* for convenience.
The current situation is not that bad. The primary market provides fixed price tickets that are occasionally below market value. The secondary market provides demand-driven prices.
Artists don’t want perfectly auctioned tickets. They don’t want to appear to be gouging fans for hot tickets. And they also don’t want to look like chumps if prices don’t rise.
I haven’t seen a huge drop in airline fares. (Some exceptions sure, but I’m talking amongst the major players.)
Nor I have seen a drop in the cost of dogfood & pet supplies.
I have seen a drop in technology & electronics, but that’s simply how that sector has always been marching.
people aren’t mad at the prices. they’re wiling to pay exorbitant prices, just not to third parties
perhaps tickets can be auctioned in mixed-seating blocks, with a cumulative reserve price.
My take: Price has not fallen because the supply/demand equation has not been altered by the Internet. Information has been set free, music can be copied at will, but a live performer is still doing the same number of gigs a year.
That’s my issue with the “give away the music, make money on the performance”. It doesn’t scale for the successful artist.
That’s not true. People pay more than at all the time. Have you worked in retail where you can see the wholesale price vs the price the customer pays? There’s a huge markup. (And that’s on top of the other markup in the chain.)
What pisses people off about Ticketmaster is you don’t get a total price from the start. You’re told $25 at the start, and then fees are piled on. The reality is if you were told $50 from the start and on fees, you’d be much happier.
(Why this doesn’t happen is a different story all together.)
(ex?) Billionaire Dan Gilbert had the right idea but it was shot down after a legal battle w/ Ticket Master.
“Cleveland Cavaliers owner Dan Gilbert also controls Flash Seats, a ticketing company that enables season-ticket holders to enter games without paper tickets – they can use a credit card or other ID to gain electronic entry to their seats.
But those same fans were also supposed to use Flash Seats – not a ticket broker or exchange like StubHub – to resell their seats. (Ticketmaster sued the Cavaliers over the use of Flash, and in October a U.S. district court judge recently ruled that the team had violated Ticketmaster’s contract with the Cavs. The judge ordered the team to stop using Flash to resell tickets.)
Flash Seats’ technology makes event tickets a bit more like plane tickets in that the electronic seats are assigned to specific people. And ultimately, analysts believe, performers and teams will prevail in requiring ticket holders to use sanctioned sites, not brokers, if they want to transfer or sell unused tickets”
http://money.cn...rtune/index.htm
Agreed. Flash Seats was very slick and fast. I was surprised how fast the Cleveland fans grew accustomed to it.
They are just bitter because they are not in control of the marked-up profits. Simple and stupid. Most of these “artist” grip about the angst in the world but touch their greedy grubbing cut of the pie and they whine like a three year old.
firstdibz.com
Many tickets are guaranteed to be worth more than face value in the aftermarket, so brokers aren’t really risking their money in the same way as investors in these cases.
Glastonbury in the UK have done a good job of limiting scalping, by only allowing a limited number of tickets to be bought on any given credit card and printing names and addresses on tickets so they can’t be resold.
“Many tickets are guaranteed to be worth more than face value in the aftermarket, so brokers aren’t really risking their money in the same way as investors in these cases.”
yes, they are. how do you think they get those tickets? usually by paying off someone at the venue. Hot tickets with little risk don’t get to the broker without someone getting their piece.
and look at your second paragraph. What if I wrote “the NYSE has done a good job of limiting resales of stock, by only allowing…” it’s absurd that tickets should be viewed any differently than other assets.
Thats a poor comparison.. stocks dont have a set time line by which they will expire. This means that resale is generally inevitable unless theres bankruptcy so limiting stocks to one person for eternity is obviously impossible.
By not allowing ticket ticket resales, it means that a. people will have to really commit when purchasing the tickets, b. it stops a flood of people buying them out of the gate on a whim because they believe that if they don’t go they can resell the tickets. c. means that more tickets are available for longer d. prices of the ticket remain at their reasonable value.
bonds and options do
Tickets are exactly what the vendor wants them to be. If a vendor wants to provide an event where anyone that wishes to attend can purchase a limited number of tickets for a reasonable price, and they ensure that this is possible by artificially constraining the market, who are we to object?
Moreover, is this not for many individuals, entirely the purpose of attending and promoting an event — the enjoyment (and funding) of performance?
Of course, for scalpers, it’s all about money — not intangibles such as the enjoyment of a broad range of fans. That’s why they’re called scalpers, and why we don’t like them.
IPOs have lots of limitations and regulations. Seems to me that ticket sales should have limitations and regulations as well when sold INITIALLY. Arrington, the NYSE is by definition A SECONDARY MARKET. Initial Offerings are treated quite differently in the securities markets than secondary trading (politely in yer face, man).
@Michael Arrington
I still don’t think tickets are the comparable to stocks.
The example of the NYSE limiting resale of stock isn’t the same as Glastonbury forcing you to prove that you haven’t bought your ticket on the aftermarket to allow you to cash in your “asset” (i.e. gain access with your ticket).
Tickets certainly have value but they aren’t an investment in the same way as stocks or other traditional assets are. Firstly, they expire. As well as the fact that 99% of end users aren’t buying them as an asset or an investment, they are buying them fully expecting them to lose 100% of their value after the concert is over.
True but many is not most. Most events don’t sell out and have prices available below face value on the secondary market.
Startupwizz, Michael Arrington knows what he is talking about. I have been investing in secondary ticketing companies since 2000.
If you really believe that the brokers are not taking risk when they buy tickets, then why is it that they are not all being driven around town in limousines and living in mansions? If this easy money is available, then why don’t you apply some of your consierable skills and start a business to take advantage of this arbitrage opportunity?
He certainly knows what he’s talking about. Which is why I’m reading his blog!
I’m just unconvinced that tickets are an investable asset in the same way as other assets or comparable to stocks.
Your facetious question about why I don’t start my own ticket scalping business misses the point. Popular tickets aren’t easily available and as M.Arrington says I’m sure you have to be on the inside to get guaranteed tickets. But there is no risk in buying a hot ticket, you aren’t investing in the same way that you would invest in stocks or real estate.
For instance stocks in Google won’t expire. When you sell them you’ll be selling them to another investor who is basing their valuation of your asset on the future returns of that asset. When you sell concert tickets you are selling them to someone who knows that the commodity’s (ticket) value will reduce by 100% once the concert is over, therefore in my opinion it’s not an asset in the same way as stocks are nor is it something one would invest in.
I think its hard on fans who can’t afford tickets because the demand and so market prices goes up.
But then again a fair few of them have probably stolen the same band’s music from some filesharing site – so sympathy is in limited supply.
Ooh – thats going to be controversial.
blame the artist. if they cared so much about the fans, they could double the number of concert dates to drive the prices down. but high prices for tickets are part of the mystique around hot bands, they love it.
Also blame the venue, representatives at popular venues many times wont allow a band to play their venue if they are playing other venues in the area.
You make a convincing argument, so does this mean that you are okay with me reselling techcrunch to make some income for myself?
i’ll let you work out the logic on that ridiculous argument on your own. If TechCrunch is a concert, it’s free to get in. start with that and work down.
it would be free as long as you were ok with going blind
Personally, I have no problem with ticket brokers. In fact, I have used them many times to get premium seats. The problem I have is that there are laws in place in my state that will not allow me to sell my own tickets outside of the event for a premium price (i.e. “scalp”) but ticket brokers can do it all day long from their offices. I guess since the states are collecting tax revenue, it’s not a problem.
many state and local governments limit ticket sales outside venues. I actually think this is good, because many of these tickets are fake. Buying from a reputable online broker, or an ebay seller with a good reputation, is safest.
I agree with virtually everything you’re saying. I would add two amendments though.
The first is that while there might be a market for all tickets, there also does arise an ethical issue. Events put on for certain causes or with certain goals come to mind. Jay Leno is doing a couple of free shows in Detroit I believe and there were people selling the free tickets on eBay for hundreds of dollars. I believe they have the right to do that, but it is somewhat despicable.
The more general problem is with the concept of supply and demand and free markets. If an entity (reseller) could consistently gain large enough shares of tickets for events they could exercise price control and potentially anti competitive practices. I realize it is only ticket selling but it is certainly a business and people try to, and succeed at doing things like this.
Ticket sellers aren’t quite market makers because their goal isn’t to trade in order to hold certain prices and increase volume. They’re more akin to an investment fund. I don’t know what kind of deals go on in the ticket reselling business but giving investment funds loose reign can cause problems.
Market maker, Investment fund… I think they fit most peoples definition of profiteer.
Not to mention that removing the secondary market will also screw fans, or at the very least put restrictions, when they really cant attend an event and want to get the money back for the ticket. When an artist cancels an event the ticket holder (fans) get screwed because they don’t recoup (most of the time) the fees (including shipping) that they were charged by ticket distribution companies like Ticketmaster.
I do agree that their should be restrictions on how many tickets someone purchases through companies like ticketmaster. Chances are tickets to concerts for Britney Spears, Morrissey, ect. will sell out and the quantity demanded for tickets will be high. Brokers sometimes take advantage of this and use their connections as well as software to purchase high amounts of tickets as soon as they go on sale, sometimes even before they go on sale. Many of those brokers (atleast the good ones) have AMEX which allows them to purchase tickets for “premium” concerts before they go on sale giving them an advantage.
Also, as most bands are not “allowed” to make money from something as archaic as selling what they produce, they have to make it on concerts and rubbish overpriced merchandise.
What would be nice would be more artists selling direct to fans (music, tickets etc). I know they could use that internet thingy – that could work.
I think most people have a problem with greedy record companies and film studios. Not the people that make the art.
Agreed.
“Most ticket brokers don’t make much money, particularly when you factor in that they’re putting their own capital at risk. A few, those that have good instincts and the right connections, do very well.”
Do you have any research or sources to back up that claim?
I’d imagine that the opposite is true for hot events, like the Super Bowl or a NIN concert. Face values of such tickets tend to be far less than what resellers on eBay charge for them.
he said he was in the biz
Right but _most_ brokers _don’t_ have access to tickets like those events.
once again the big dog, Michael Arrington lacing my shoe strings up with that good game. I’ve been in this music hustle for a while now and my crew gets more heat than other acts of our caliber largely because of being early adopters of websites and tech gadgets. and how do we do it? the big dog and techcrunch. friend connect, grand central, the guys from searchme emailed me the other day. beta test after beta test, watunes, pmog, sprout builder, wix all that. and here you are again with knowledge on scalpers. never really thought of it, you make a good point. skip all these haters man your a real O.G. we are having our 4th annual event and if you go i’ll get you a drink or something… actually our lawyer is near your new office so perhaps i’ll run into you. respect
WTF??
I am trying to build a application called ticketfeed, based on Twitter’s API, for people to buy and sell tickets directly with each other. (twitter.com/ticketfeed)
I’m actually looking for people who are passionate about this to attempt to provide a better solution.
It is the trust issue, local government regulations that are a barrier for such a thing. Partner with some influential VC/investors, and do not look at it as a zero sum game.
Someone needs to address the monopoly of Ticketmaster and how they win regardless of ticket pricing. Capitalizing on enormous inflated “convenience charges” that everyone blindly pays without heed. I have on a number of occasions I have wanted to attend a concert and decided against it based on the completely insane amount of money tacked on to the ticket price. As well I have always written the artists to alert them that I was not in attendance at their show because of the Ticketmaster fees added to my ticket.
Agreed!
The problem with this argument is that the concert is the band’s asset to sell. If they are willing to sell tickets at below market value pricing to gain goodwill amongst fans, that is their decision. The secondary market is stripping that option from the band.
once you sell something to someone, you don’t get to control the price any more. or if you try to do it contractually, you can’t be surprised when the price goes down.
I am glad to hear Trent talking about this. I’ve been developing an idea for a startup to compete against TicketMaster/LiveNation with some interesting ticketing methods that are fan and artist-friendly.
Michael, I understand where you are coming from, capitalism handles efficiently allocating scarce resources like tickets.
However, I also understand that an artist should have the opportunity to charge less than market value for a show, if they want, and to try and distribute tickets in a different method. In their case, they may not be interested in being most efficient, but in giving their fans a fairer shot of seeing them live. On the flip side, some artists will want to effectively auction the tickets, so that they get the most bang for their buck.
Some artists will want a mix.
There are ways to go about this that TicketMaster/LiveNation are not considering. There are ways to make buying tickets extremely enjoyable and flexible, rather than nerve-wracking and annoying. I think all of us have probably tried to buy tickets on ticketmaster, only to have them sell out in a couple seconds, and then know that now we’re going to have to hit eBay just because a bunch of jackasses bought tickets that never had any intention of going to the show. That’s not efficient allocation of resources, that’s simply bad allocation in the first place.
I don’t want to divulge any more of my ideas, because I have a lot of them, and I’ll need all of them to have a chance against the big boys.
MGZ
I have always wanted to start a similar idea. Super-Mega Power to you man I hope you can bring the big boys to their knees. I for one loathe Ticketmaster, and would consider any alternative out there.
I’ve scalped tickets when I was a kid. Sometimes, we’d make good money. Other times, we got hit, and hit hard.
It was our own fault though. We over bought and mis-judged the turnout. My bad.
Also, things like weather can often have a impact on some events. Sometimes these things are a little hard to predict and if you have a huge investment it isn’t always guaranteed to bring you a profit.
Telling me I can’t sell my Cubs tickets for twice the face value is like telling me I can’t flip the Camaro I bought off Craigslist for twice the amount.
As far as I’m concerned, I can sell whatever I own for whatever price I deem necessary. Nobody is twisting the buyers arm.
>is like telling me I can’t flip the Camaro I bought off Craigslist for twice the amount
actually, it’s considerably different
no, it isn’t. you’ve just got it in your head that reselling tickets is wrong.
Chuuch
An individual flipping a ticket in a competitive marketplace is quite different from a cartel of a few brokers who’ve got the market locked up. Those practices have been outlawed in most other markets in this country. That’s why there is outrage and high prices.
You’ve just got it in your head that the ticket market isn’t corrupt.
no, really, it is. there are substantial differences between reselling a car and reselling a concert ticket. here are a couple to get you thinking: perishable goods, and free market v. monopoly/oligopoly.
and, no, I don’t “just have it in my head that ticket reselling is wrong” anymore than you have it in your head that it’s right.
Concerts tickets are perishable goods much like airline seats. They are not the same as gold/stocks/etc and the resulting market dynamics are substantially different. Direct parallels between the market actors cannot be drawn (ticket brokers are not the same as stock market makers, etc). The broker-based distribution model is corrupt. You’re right, the “waiting in line” model is certainly inefficient but that’s rarely how it works anymore. We’ve moved primarily to an internet-based model that is considerably more efficient. There is no need for brokers in this model except to pick every last cent out of the fans’ pockets.
You dont actually mention how they’re susbtantially different. Sure they feel dif – but i wonder if thats just the information element. In terms of ‘preishable’ argument – bonds are perishable (i.e. they get priced up to a payment date)…
financial market makers tend to have much better information (i.e. they can see the book of limit orders etc). The more information the narrower the spread (typically) and the spread is usually pretty transparent.
In ticket sales seems like there are enormous information asymmetries. Scalpers rarely have access (or maybe they do via connections?) to the ‘book’ i.e. the market deal flow. And anyway, as mentioned demand info comes late, at that point its hard to reach an efficient outcome..
I dont get the idea that even when a ticket is hot hot hot! a broker only makes 10% – this would suggest after losses he doesnt make any money at all…surely its more likely to be volatile returns – that when adjusted for capital costs nets out to a persistent return of 10% or so – since there are few entry costs into the game this isnt so surprising…if it was that profitable we’d all be doing it – and then it wouldnt be that profitable
You obviously read a portion of Reznor’s post — out of all the artists talking about scalping and ticket prices, he’s really the only one that explained the system well, and offered various ways to deal with it.
I like the fact that he explained the ticket ecosystem and how he approaches it — certainly one easy way to deal with scalping is “personalized” tickets that require an ID at the venue.
What Reznor was saying, though, was that there should be some transparency — some artists complain but have made side deals to get cash from scalping agencies. These are the true hypocrites.
Reading the post shows that Reznor is offering his own solution to scalping, but I wouldn’t say he goes so far as to say everyone should use it — rather, he’s saying “how about the consumer knowing what’s going on, and everyone showing some transparency.” All he’s advocating is that he, as an artist, prefers to keep control of his prices — certainly a fair statement. If U2 and others could care less, I got the impression Trent could care less (and, seriously, U2 so badly sucks next to NIN that it’s scary).
He does offer a fans solution — don’t buy tickets from these agencies and try to get artists to be more responsible — but in reality he says “that ain’t going to happen anytime soon, but for my part, I’d like to see what I can do.”
oh, i read the whole thing. and it’s fine, except when he calls ticket brokers parasites. But he’s correct that many artists complain about resellers (like he is) but are also gladly pocketing the money that is created from these secondary ticket sales. thus the title of my post.
Wowsers! What a staggering justification for what amounts to theft.
Scalpers hurt everybody. If the rich want a more efficient market, hire a kid to wait in line for them.
Scalpers make me fume. They and anyone else in the chain responsible for marking up tickets and removing the option for normal people to attend events should be prosecuted.
The worst is when ’sold out’ events have empty seats and many who would have been thrilled to pay gate prices to attend can’t because the tickets are priced outside of their reach.
And who wants to purchase tickets from some seedy guy standing in an alley. You can never know if his ‘tickets’ are the real deal or forged.
…Dale
Theft != free markets.
And yeah don’t purchase from guys in an alley.
yeah, communism is super awesome on paper.
Paper bought by someone else, no less
Dale-
To put it lightly, you are a moron. Clearly you don’t believe in free market capitalism. I fear what you do believe in. I was going to write a long response to you about why everything you said was complete BS, but the fact that you can’t understand free markets made me realize that I’d just be wasting my time. How can you have no pricing rules for Cokes, airline tickets, clothing, etc., and then slap restrictions on a commodity like tickets? Ugh. FREE MARKETS will always win.
Where are the complainers that have been buying my NBA tickets for half face all season long?
Mike,
It’s true that ticket brokers are dealing in “scarce goods” — but that scarcity is often exacerbated by ticket brokers themselves. Bricks-and-mortar brokers often pay folks a few bucks to stand in line to gobble up hot tickets when they go on sale — or phonebank/Internet bank the online direct selling systems.
just like IPOs. there are greater injustices in the world. and those same guys buy tickets for events that turn out as duds, and they lose money.
>there are greater injustices in the world
what an incredibly weak defense
You guys should check out Qcue.net. Pretty cool stuff.
I was the lead tech guy there
. I don’t work there anymore though … they’re totally screwed up now.
Sorry if I missed this in the comments above, but Im surprised that no-one has mentioned
Yoonew.com
An amazing startup company that addresses these exact problems with a beautiful solution of allowing people to buy ‘ticket futures’ at very low prices and then buy and sell them on a marketplace they developed.
Cool concept, but Joe Banana Public doesn’t understand supply & demand let alone futures.
Also, FirstDibz, their main competitor, bombed the Super Bowl:
http://www.tick...ler-fraud109145
Like art, a ticket is only worth what someone will pay for it. They aren’t forcing you to buy it. Supply and demand. Simple.
I have never scalped tickets or bought them, but in an entrepreneurial spirit, good for them.
Illegal you say? Waaaaaa QQ
>Supply and demand. Simple.
except not. a broker-based model is anything but simple supply and demand.
Michael, I met you at NATB with Thomas S. when I was CTO at Encore Tickets and you were CFO at RazorGator.
I really enjoyed this post, and am AMAZED that you now have one of the most popular blogs on the net.
This is a good post and one that is very timely, as if you’ll look around, the entire new administration is trying to tear down capitalism.
Reznor’s just riding the wave of media-flared corporate hatred right now.
Shoots, this “scalper” issue has come in ebbs and flows for years.
The difference is now, in this current landscape, it just make take hold.
Cheers Bro.
Much success.
Funny no one has mentioned TicketScamster’s own “broker” site. All they have to do is automatically re-direct you to their scalp site as soon as tickets are sold out. Funny how shows are sold out as soon as tickets go on sale, but they have plenty to sell at inflated prices on the scalp site. Now that is totally f**ked up.
Mike, one can agree or disagree with your conclusions, but this is one well thought-out, well written article. Welcome back!
I love scalpers. One of the purest examples of free enterprise and market based pricing that exists.
I have been able to see 2 World Series games and countless college football games, SF Giants games and concerts that I otherwise would not have been able to see without scalpers or people selling tickets on eBay. Who has time to stand in line for tickets, click and refresh online trying to buy tickets, or otherwise cajole and influence to get tickets to an event? Waiting to the day of the event is often the only option for me and if no one is selling on Craigslist, scalpers are my only option. I’ve also been burned by buying tickets far in advance of a game, only to find out that people were literally giving away tickets at the time of the event.
Sometimes I get a really good deal, sometimes I pay more than face value, but either way I personally love the bargaining and market pricing that goes in to the transaction. Most of the scalpers I have met are basically good people who also love the thrill of the deal and negotiation. And as Michael points out they are taking all of the risk, unlike Mr. Rezner. Really tough stance there, Trent, to speak out against ticket brokers – kind of like your local politician being anti-crime…who is pro crime?
Bottom line is that I would rather give my money to a scalper than TicketMaster any day. They take no risk and provide no value.
>One of the purest examples of free enterprise and market based pricing that exists.
actually, it’s not. it’s an example of carefully controlled trade.
>I have been able to see 2 World Series games and countless college football games, SF Giants games and concerts that I otherwise would not have been able to see without scalpers or people selling tickets on eBay.
unless you tried to purchase via “mainstream” outlets and they were sold out, you can’t make this claim
>Who has time to stand in line for tickets, click and refresh online trying to buy tickets, or otherwise cajole and influence to get tickets to an event
I guess it depends how much you want to go. but, practically speaking, lots of people.
>Bottom line is that I would rather give my money to a scalper than TicketMaster any day
make no mistake, you’ve paid Ticketmaster and then some.
John-
Glad to hear that you have time (and money) to spend being TicketMaster’s little bitch. I value my time over money, and paying a few hundred over asking price is much better than spending a lot of time trying the “mainstream” outlets – which all suck.
For me – scalpers are the perfect alternative. Love those free market, risk taking mo fo’s.
Microface, what the hell are you sputtering about? John just shut you down point by point.
Get a clue man. You just got rubbished.
@Marc-
No, Marc, John was just posting BS like all his other posts on this thread.
His point by point nonsense has nothing to do with the fact that lots of people see scalpers as a valuable secondary market that makes tickets available at the point of purchase on the day of the event, rather than spending hours trying to get tickets through his precious “mainstream” outlets. I like the flexibility and convenience provided by scalpers.
As Michael pointed out in his original post, many of the tickets that scalpers provide are not purchased via Ticketmaster, but through on premise purchases and through promoters and athletes in the case of sporting events.
I would bet good money that those guys standing out front scalping tickets did not get them from promoters or athletes.
Just a hunch and can’t back that up.
I have to agree with Michael on this one. For music at least, this is really only an issue for big Billboard type bands for which there’s an easy solution. Fan clubs. By creating a fan block to pre-sell tickets to, you’re insuring your biggest fans get dibs on the best tickets first.
I hate to use them as an example, but The Dave Matthews Band has been doing this for a decade. If you’re an A-List band, you have the clout to negotiate with the venue to reserve and purchase this block of tickets for your fan club.
If Trent Reznor is so concerned about scalpers, why doesn’t he play unlimited seating venues like giant fields… or come to bat for his fan club by negotiating block seating for them?
The real problem is TicketMaster has made it possible for any person anywhere to purchase tickets for any concert or event. This has expanded the resale market infinitely. Combine this with eBay and TicketFast and you have a massive middle market that should not exist for regional events.
The real problem is not with the scalpers (they are scum) its with the exclusive ticket sales contracts that TicketMaster has with all the venues. Not only does this create a monopoly that allows them to charge what ever they want (upwards of 60% on top of face value) but also limits the ability for fans to acquire the tickets through legitimate manners. With few outlets fans are forced to pay for and purchase tickets through a single outlet -TicketMaster.
The solution is simple:
Tickets are sold (or actually reserved) ahead of time. If you make it to the show than there are no problems. If you cant then you forfeit your seat and that seat is sold at the venue. If you want your money back for the seat you forfeit it along with a small “restocking” fee. Otherwise you have to show up at the venue and either take the seat or sell it to another person at the venue.
Scalpers are leeches who steal from the bands, the promoters, the ticketers and the fans.
They are not a necessity but instead a parasite that has grown fat on the blood of those who make the events happen.
You can argue all you want about the merits of a ticket broker but they are nothing more than opportunists who lie, cheat and steal in order to meek out a small profit at the expense of everyone involved in the production of the event.
Hot topic on New York sports talk radio in recent weeks has been ticket pricing at the new baseball stadiums (Yankees & Mets). It has come out that many of the venues are now partnering with Stubhub (or Ticketmaster/Ticketsnow) and getting a cut of the revenue. It’s a backdoor way for the venues/clubs to get a cut of scalping. Public disclosure has been limited so far, but now people are starting to howl.
I think there is a fundamental flaw in saying tickets are same as any other asset like stocks etc. Assets have infinite span where as tickets value needs to be exercised within a time limit.
You need to make analysis after changing the definition of ticket i.e a ticket should be valid life long or for an year.
The entire landscape/behavior of brokers buyers changes when that happens.
But this is something not possible/probably not practical for concert tickets.
So we cant really treat tickets as stocks or any other asset.
ok, compare tickets to the fresh vegetable market, which have a limited shelf life. No one gets pissed off at Safeway for buying vegetables from farmers and reselling them to me. any argument that tickets are fundamentally different is a ruse to convince yourself of some nonsense. see a therapist instead.
wow, are your drunk or are you really soo head strong. you seem to think that you know everything and what ever you say is always correct.
wake up and book your appointment with your therapist oh no, some one has already taken appointment now how about if that person selling his appointment to you
it’s becoming more and more apparent that you haven’t really thought this through despite the fact that you were the COO of an industry player.
The fresh vegetable market and Safeway’s reselling is a poor analogy. Go ahead and noodle on it for a little why and you can probably begin to understand why.
License ticket scalpers and tax them just like the gov licenses and taxes the original sellers. Then let them go to work…
What aggravates me most is that the scalpers make enormous gains without any legal restraints or paying their fair share of the taxes… and if you should happen to pay a steep price for a ticket and it turns out to be counterfeit, you have no recourse.
Wrong. Every broker that I know pays their taxes just like every other good American. We are small business owners just like the guy that owns the tool store around the corner. Why would you assume that we don’t pay taxes? That’s just absurd.
Ignorance. The problem is that Ticketmaster has been pumping so much propoganda into the public for so long.. that everyone thinks all brokers or scalpers are bad. Ticketmaster did that because fear drives ticket sales and if the public is afraid to get ripped off or get phony tickets on the secondary market, they know that they are the only option. They also use fear to get people to buy rows X, Y and Z at the onsale. They hold back the good rows and make people think that they better buy before tickets are sold out. People think that when tickets go onsale everything from row A-Z is sold and is sold A first and onward. In reality, Rows A-H are rarely even released, and for the first 30-45 minutes all you will pull up is crappy rows.
This is what is wrong with Americans. The only thing that matters is the market value of a good. So if someone offers you $20 for your baby daughter’s favourite teddy bear, you have a choice between two prospective customers – one who can pay nothing and one who can pay $20. So you go with the $20 right? The emotional attachment that one has is of no importance, right?
Surely, you’ve noticed that fans have a strong emotional attachment to artists? And do you really think that artists want to play to a concert full of rich, middle-aged fans who aren’t really major fans of the artist but could afford high ticket prices?
Also, standing in line is not the only alternative. Conducting ticket ballots amongst those signed up to the artists mailing list is one alternative. There’s plenty of others.
What is the value of a forest? Health? A smile?
Wow, your post actually emitted a Taos hum and shimmered with wee crystals as I pondered it.
The Breaking Benjamin concert I went to last year was scalped feverishly into the hundreds on Ebay probably to the negative minutes.
And as the buddy and I sauntered, so damned semicool, at the concert through the teaming hordes of cannabis cloud-ensconced children I am recalling that I did, in fact, experience the viewage of impressive numbers of average-wage-earning white trash.
Unless these filthy-bastard-rich middle-age fuckers were POSING as average white trash I can state with some certainty that your view is a bit alarmist.
utopia is great and all until someone has to go to work to put food on the table.
So it’s a choice between decent human values and capitalism is it? There’s no middle ground?
The last time I looked, your free-market system was leaving quite a few tables without food. I wonder how many people in America were shot or turned away from a hospital because they didn’t have health insurance in the time it took me to write this post. You might be surprised to learn that there are places in the world where people are healthy, well-educated and respect each other. And yet they still manage to put food on the table. Oh yeah, your system is awesome.
oh, and what European heaven do you hail from? Don’t come crying to us the next time the Germans roll through town.
One thing we can learn from Europeans is that markets can not solve every problem we have in an acceptable way. Not if we want to live in a civil and relatively safe society anyway. Take education for example. The late Milton Friedman was a big proponent of using vouchers for schools. Whereby the good schools would thrive with greater market share and the poor ones would fail and shut down. The problem with this idea is that students aren’t magically traded to a school when their languishing one finally closes due to lack of funds. They would be left with little or no schooling for months or years while the market fluctuates to absorb them. Undoubtedly, the market solution is never 100% and some kids would be written off entirely at the thin ends of the market. These solutions are just socially unacceptable and this is just one of many examples. Market solutions like these create winners and losers. The question is: Do you want to live in a society with that many losers. Eventually, this all comes home to roost when the kids who didn’t do well in school excel at things like armed robbery and just kicking your fat ass in the street because they’d like to have your watch. We and up in a place like South Africa where you live in an armored compound with security guards. Hey you’ve got all your free market gizmos right? Just don’t get in a cab or walk down the street or the thriving criminal markets will work to liquidate you very efficiently. Once you accept that a market is simply a mechanism without intelligence or foresight to preserve it’s own existence, you should understand why we already suppress all kinds of markets. A market is a tool and we as Americans need better judgment in deciding which ones to nurture and which to prune in the garden of our economy. Do you want to live in the economic garden or the free market jungle. The jungle may look tempting, but most inhabitants don’t live for long.
If you have money to see a concert, you surely have money to pay the bills. If you are going to a concert on your weekly paycheck, you are the reason why we are in a recession.
Morals? Talk about morals, they collect money at Church to build bigger more lavish churches.. so to attach morals to a concert ticket sale is a bit silly.
“oh, and what European heaven do you hail from? Don’t come crying to us the next time the Germans roll through town.”
Better late than never I guess. Ahem. How I’m going to refrain from pointing out the state of your country’s economy on this, a page of economical wizardry actively trolled by the site’s head-honcho, I just don’t know…
(Maybe the month off wasn’t quite enough to shake the funk?)
Perhaps concert tickets should be compared to tickets for transportation – airplane or train tickets for example. Airlines charge more or otherwise require greater investment for the most popular dates and destinations, but control over these decisions remains entirely with the original provider.
While it might be possible to create a “middle market” for airplane tickets which could absorb the risk for the airlines and derive its own profits, this would certainly make planning trips more difficult and irritate customers.
Does the middle market help the original provider? Maybe, maybe not. If the brokers learn to bet well enough the same number of tickets will be sold. And if not, the errors in each direction probably negate each other.
Bottom line: let capitalism do its work with the buyers and sellers and try to avoid letting intermediaries and proxies disturb genuine market forces.
“Ticket brokers are really just market makers.” Michael nails it with this article. See my own take on it at http://twurl.nl/hzepcb. Even street scalpers have their place. I’m reminded of the time I paid a scalper $10 to sit behind 1st base at Coors Field while in town on business. Sitting next to me was the couple who had sold him the ticket for $5. Not much demand for Rockies seats that year, but the scalper was out there making a market anyway.
I have never bought or sold tickets from a scumbag “broker”, but being a season ticket holder for two professional teams and the theater, I have to put up with the jerks they sell them to.
“I paid $300 for this ticket, and I’ll do any damn thing I want”
That’s what I hear at every event as people get drunk, assault people, smoke cigarettes, stand up in front of everybody, etc, etc, etc.
As far as I’m concerned, there is no form of torture and death horrible enough for them and their customers.
that’s pleasant.
You nullify your post the moment you enter a venue.
YOUR seat isn’t purchased through a scalper but this doesn’t change the fact that a subhuman element, KILLtheSCALPERS, is still present in the venue.
@Arrington, Cyborg: You ignore a perfectly valid point in order to pounce on a tongue-in-cheek comment as if it were literal. There is no form of torture and death horrible enough for people that monumentally stupid.
Schmoo,
You’ve also ignored my perfectly valid point that addresses Scalp Killer’s main line of reasoning that Scalpers are solely responsible for presenting disturbance-causing human beings into entertainment venues, which requires a significant stretching beyond any known shape of the muscles of rational thinking.
Rude and obnoxious subhumans will be found at all venues whether or not all scalpers are ruthlessly slaughtered from the face of the mottled-blue marble. And even if we initiate a seek-and-slaughter mission throughout the known boundaries of the extended universe for scalpers, the first sentence in this paragraph will stand correct.
@Cyborg: I’ve ignored it because I’m having difficulty confirming that the sole responsibility you mention is not pure assumption pulled from the depths of you-know-where.
My only reference would be the original post – perhaps you could indulge me and point out said confirmation? or maybe I need adjust my belief that type A belonging to set B doesn’t automatically dictate that all of set B is comprised of type A?
United States Patent 7110960 – Event Revenue Management System. The science behind pricing for events…
I’ve once paid AU$550 for 2 sold out tickets that costed AU$200 through eBay. Grrrr!
Exchanging 11 $50 dollar notes for 2 pieces of paper originally bought for $100 each. *turns green*
Either way, it was a good experience and never make that mistake again – damn scalpers, taking advantage of die hard fans.
I believe eBayAU now allows you to only add a 10 – 20% premium on concert tickets, not sure how they are enforcing it.
A market will always form no matter what rules and regulations are put into place. This is because markets are natural, and brokers are an integral part of this equation.
Arrington argues that Reznor’s solution will just allocate resources to those willing to wait in line. If there is a way to transfer a ticket after the line, people who have waited in line will be enticed to sell the ticket they earned by waiting, at a profit. This already happens in highly regulated events like Shakespeare in the Park and other events where there is a long wait and a small max on tickets per individual.
If the physical ticket is eliminated and audience members are forced to wait in line overall demand will drop for concerts, which will lower prices and scare artists back to the old model.
Cost will also go up for the venues. Just think about what happens when drunk concert goers are forced to wait in line for long periods of time. Venues will need to add security people.
All of this just make sure the youngest, drunkest, and rowdiest concert goers don’t have to worry about paying a few extra bucks to a middleman.
The only thing artist need to worry about is when people buy tickets that are in fact buying real tickets. Buying a fake ticket is an extremely unpleasant experience. And the farther you push the secondary market underground the easier it will be for those who deal in fake tickets to thrive.
great comment.
See my previous comment. Hate to burst Arrington’s bubble, but this country has never had a law of the jungle free for all in markets. The biggest and largest wealth creating markets are heavily regulated and make sharp distinctions between initial and secondary transactions. This is done to specifically to prevent people in privileged positions from cornering and therefore damaging the overall health of a market where fair price discovery can occur rather than extortion.
oh, snap!
Brilliant. Spot on.
Ticketmaster is getting sued for $500 Million in Canada over funneling tickets to its scalping subsidiary TicketsNow.
http://www.thes.../article/584720
When buying tickets to an even that has “sold out” in minutes you are then prompted to go buy them at the inflated prices on the other website, owned by Ticketmaster.
Seems to me that Ticketmaster doesn’t give people much of an opportunity on the primary market and reserves large blocks to be sold only in their secondary market.
Your comment ties in with the one from Marc above, who talks about markets of a certain size requiring some form of regulation. In this case, Ticketmaster is acting as a cartel with an unfair advantage. In that case, regulation should act.
Marc, on the other hand, expects the hand of government to reach even further down to individual sellers who are acting within market rules.
Stever I haven’t read your linked article but I agree with you. Its impossible (or rather improbable) that Ticketmaster tickets get sold out so quickly. Personally, I have never been able to buy NBA tickets at cost on ticketmaster. I always end up on stubhub or the ticketmaster exchange site.
Reznor is right in requesting that initial sales (or a majority of sales) be limited to individuals (with their names on the ticket) and small groups.
When I stand in line at say the TKTS booth at NYC, I can see who is in line, I can see if I have a shot at buying the ticket.. online there is no such visibility. For all I know, those tickets were never even available.
The only way this system will change is with better legislation, self-regulation by Ticketmaster or by a co-ordinated mass boycott of all Ticketmaster sales and scalper outlets (improbable but not impossible).
Maybe this is why it is rumored that TicketMaster has hired an investment bank and is exploring a sale of TicketsNow…
Ticketmaster wants to be able to sell the ticket and allow others to resell the tickets, which puts them in a lose-lose position. It’s unfortunate that they control the first transaction and want to also be in the secondary ticket sales business.
The problem with event tickets is that it can be a volatile market.
That said, the value of secondary market tickets is in fact, what the market will bear.
Mr. Arrington, you’re missing the point.
Your “free market” argument holds about as much water as a municipal sewage line in Beiruit.
Can you show me the risk curve in buying Justin Timberlake tickets at face value?
This ain’t no free market. It’s all about bots, cheating, and scammery. It’s fixed, rigged game for a small sect of insiders. Just like the stock market. And we pay the price.
Wade is absolutely correct. Just a lot of market cornering going on. It’s a dysfunctional marketplace. Wade, it’s hard to convince people of that when all they’ve ever experienced is illiquid and corrupt market that’s rife with graft. Arrington obviously lacks the depth of experience to understand the underpinnings of a healthy market.
Arrington is failing to recognize qualitative differences in market places. If you go to the third world, you’ll see some very bustling market places that look pretty free on the surface, but are constantly having the wealth sucked out of them by corruption. Hard to progess in conditions like that.
nope, don’t know much about a “risk curve” or why one is needed to explain that if joe buys 20 tickets at $50 bucks a pop…. then joe has got some risk. with respect to cheating and bots and all… I was taught not to knock another mans hustle. Mr. Arrington made a great connection to a super market as a middle man and they wax and gas stuff to as you say “cheat” as well. the original point seems to be a responce to calling a group of people parisites while you profit from them
Risk isn’t the issue. A corrupt market is the issue. I’m all for markets and free enterprise, but markets don’t exist in a vacuum, as some here seem to believe. This is just a fundamental if your goal is to have a well functioning market.
It should be like drugs, a market that is regulated by the government.
Those regulations should include the requirement that Scalpers be able to produce proof of proper bathing and hand washing on demand. Like a McDonalds bathroom sheet hanging around their neck.
They should also be required to self administer breath mints every 30 minutes during their operating hours, or wear hospital masks like SARS patients.
And lastly, they should have to go door to door in their neighborhoods like convicted sex offenders do, warning parents that they’re scalpers and that they don’t believe in toothpaste.
Like @Dave pointed out, markets will always be made, regardless of Capitalist USA or Communist China. Welcome to the human race. You should thank your lucky stars for it.
The only inefficiencies that exist are imposed by those in power, whether it be companies or governments or whatever. The reality is, the “face value” is often plainly incorrect. The IPO of recent past comes to mind. Google figured out this inefficiency and (as much as it could) maximized its financial draw while the investment bankers lamented their jaws slamming on the ground. The artists and venues could totally pull a “Google” if they wanted to and remove the “parasites”. But as long as they pretend that face value should be $15 for a ticket that they know will ultimately sell for $200, I’m not gonna feel bad for them. They’re either lying (likely) or stupid or both.
There’s discrimination on multiple levels if we want to talk about “face value” and being a good guy and standing in line. As stated several times earlier, some folks have more time than money and it seems that several commenters would prefer that “time rich” people be preferred to cash rich. What is the difference? Should someone who coaches their daughter’s softball team while working 50 hours per week be denied a ticket because someone else has a part-time job and can sit in line? Where’s the fairness there?
The artists could try to maximize their revenues or target their specific market if they tried harder but what they want (just like the RIAA) is for everyone else to change their lives and behaviors to meet the needs of the artists (and the RIAA-ish). *That* my friends is bullshit.
Here is the falacies of your arguement:
1) Venues sell tickets to brokers to events that are already going to be sell-outs, such as the upcoming Springsteen shows in N.J.
How is equitable to the general public when a company sells all the tickets to a broker?
2) In the case of Ticketmaster they direct people to their own scalping operation meaning they’ve
sold the tickets to themselves, making money and are going to make money on the initial sale and then again on the reselling of the tickets.
Your comments that brokers are taking ‘risks’ is just plain bullshit. Without their connection to the promotor or venue they wouldn’t have access to buying 99% of the tickets to high-demand shows.
Where is there risk in a Springsteen show or Prince or the Jonas Brothers?
So please don’t twist the inefficientcies of the market into a justification to steal from people less connected than the ‘brokers’.
As someone else pointed out, the only way to truly wring out every last possible dollar is to auction off all tickets.
I don’t have access to any insiders, I don’t use programs, yet I’ve still managed to make money as a ticket broker doing it the legitimate way with my own money and my own research.
Corruption is a problem, but I’d look more at Ticketmaster and other larger companies posting multi-million dollar revenues as the true problem. There are only a handful of companies out there who have enough money to hire a programmer to make the programs that work on Ticketmaster. I know of just about everyone of them as its plain and simple to another broker when broker A has 30 tickets in row A while everyone else has lesser rows.. no rocket science in deducing who isn’t playing by the rules… The overwhelming majority of brokers and scalpers are doing things legit but are getting grouped in with the bigger companies who aren’t.. Ticketmaster is leading the way.
For anyone who missed it further up. Michael Arrington’s arguments have been thoroughly trashed in this thread because of several flaws in his thought process.
1. His ignorance of important differences between primary and secondary markets.
2. His inability to spot corruption when he sees it. (Good thing he’s not a cop)
3. He never saw a market he didn’t like.
yeah, no. you guys are mixing up protection of property rights (the purpose of government) with all kinds of other stuff. And you guys have no idea how the ticket business works, you just get mad when a show is sold out and want to blame someone.
You’ve got your ironclad ideals in your mind. Anybody and everybody who disagrees is an idiot or a crybaby. Wow. You are one stubborn fella. Bit of a jerk to your ad-viewing readers at times. There are just some things you will never ever comprehend.
I think I might be getting tired of this. Or maybe it’s you who’s getting tired. It’s no longer enjoyable to read your posts. I don’t think I like you anymore.
Yeah, I think I’m done. I’m gonna move along and find another sandbox to play in. No hard feelings, just disappointment.
See ya.
Don’t you understand it’s Mike’s opinions that got this blog to where it is today. How many blogs are there that talk about tech news and how many are there that have the audience TechCrunch does.
Maybe if we made the same $$$ you do…..it would be cool to have the best tickets available if price is not an issue.
But for the rest of us, we want some regulation and transparency. I think you’ll find that people aren’t against reselling tickets for a marked-up price, but they are against the way it’s currently conducted. (i.e. – bot farms, venues holding back the best tickets, etc.)
Anyone who just witnessed what’s happening with the stock market should realize that not all “free markets” are healthy.
ok so why is everyone mad at scalpers and brokers? It isn’t us who is shoveling tickets from our primary website over to a secondary market site. We have to get them from Ticketmaster just like everyone else. The fact remains that before Ticketmaster acquired TicketsNow, I could get first few rows to any concert if I sat at my computer all day and just tried over and over and over. After the acquisition, TicketsNow became the new owner of all the good seats.
Ticketmaster needed an alibi as to how all the good stuff was showing up on TicketsNow. Thats why they opened TicketsNow and TicketExchange to the general public. Convenient truth. Easy to blame the general public as buying up everything and reselling it on there site. Before they could just blame brokers and “bots” now its the general public they blame along with brokers. They want to sell TicketsNow because they got caught and its really of no use now as they’ve completely dimisnished the value of what TicketsNow once was.
Michael Arrington is right. Most of the people writing angry missives really do not know what they are talking about. I bet not one of them has ever worked in the industry. If they have, they should be ashamed of theirselves for not figuring it out.
It’s a simple case of supply and demand. The higher the demand with an unequal supply will always cause an increase in price. It’s fair economics.
Think about it this way: If I put together a theatre performance with 2 million people wanting to attend and only 50 seats available, the demand should, & always does increase the price per seat until only 50 people can afford to sit in those seats.
Everyone will always have a different opinion in the end, but that’s how I see it.
Cheers,
Jeremy
http://www.ticketchoice.com.au
actually demand doesnt fall to zero before the show starts, its just that most operations good enough to keep numbers dont sell tix that late in the game. note stubhub’s storefronts on broadway.
Here is what Harvard’s top economist wrote to his blog yesterday about this subject:
Jay Leno disses the free market
This is an amusing story, good for generating class discussion. As I understand it, here are the facts:
1. Comedian Jay Leno takes his show to Michigan to help “not just the autoworkers — anybody out of work in Detroit.”
2. He gives away tickets for free.
3. Someone tries to sell his ticket on eBay.
4. Mr Leno objects.
So I wonder: If a person down on his luck prefers the cash to the opportunity to watch Leno live, why would Leno object? Is it altruism that is really motivating Leno here? Is he really sure that the unemployed person in Detroit would be better off with an evening of laughs than $800 in his pocket? Or does Leno want to play to a live audience of unemployed workers so he will seem altruistic to his television audience?
Absent externalities, markets improve the allocation of resources. Both the buyer and the seller of the ticket must be better off: otherwise they would not engage in the transaction. The only significant negative externality that I can see here falls on Mr Leno himself. In other words, Leno’s objection to the eBay sale is an understandable and fundamentally self-interested act in that the sale impedes his abilty to appear selfless.
I was secretly hoping a “for real” economist would weigh in on this post … reprinting the msg above is just as good (bravo jecool). As pointed out, Leno is just like a popular recording artist, and protecting his street cred by public posturing benefits him directly (better guy, more viewers, more ad dollars, more $$ for Jay for him to do with as he wishes (add to his car collection, give to charities, whatever).
And bravo to Arrington on his post. He’s exactly right – let the markets play this out, and the most efficient result occurs. Are there “winners” and “losers”? Not from an economic perspective – no one holds a gun to a soccer mom’s head and says “buy a Miley Cyrus ticket for $2000″. If she paid the price, it was worth at least that to her.
But, I appreciate that a “fan” is unhappy if they can’t see their fave band live. But, if they can’t afford to go, so be it! I’m a huge fan of Mercedes Benz cars. I have posters of Benz’s in my bedroom, a necklace with the Benz emblem, I even named my daugheter Mercedes. But, I can’t afford to buy a Benz, so I drive a Toyota Camry (which I bought used). Should Mercedes lower its price for me, because I’m their biggest fan? What if I blog about how awful a company Mercedes is for charging so much for their cars? Can I generate enough public outcry, forcing them to lower their prices?
The only counter-argument raised that makes sense to me is that for more transparency in the market. Bait-and-switch is unfair (i.e. TM saying it’s “sold out” but then pushing fans directly to Ticketsnow). But, let’s stop blaming TM. This is on both the fans and the ticket sellers. Fans still act like this is the 70’s, tickets should be $5, and stoners that wait in line should get the best seats in the house. C’mon, those days are over, and online sales have greatly increased the total amount of tickets sold (not to mention saved thousands of wasted hours standing in line – heard of “opportunity cost”, anyone?). If fans feel like they’re being screwed, it’s because they’re holding on to the false notion that it’s still the 1970’s. The fact that markets change is what makes them so efficient.
Whether you want to believe it or not, there is no face value to a ticket. Period. There is only a market value. I’ll take it a step further – there is no “face” value for anything! Only what the market will bear.
… and, yes, it is clear that many in this string don’t understand how the live music industry operates. Anybody with skin in the game (bands, promoters, venues, etc) sell to “brokers” in order to transfer risk from their books to the brokers’ books. Brokers assume the risk at a price that is fair to the asset holders. Like an IPO, even if the stock pops on the first day (meaning the company left money on the table), the asset holders are still happy because it’s gained the capital it desired at a price it thought fair.
I have bought from ticket brokers (and, again, I’m not wealthy). My experience is that that they provide a valuable service and charge for it. I have also had one or two bad experiences with brokers who were total scumbags. Hey, welcome to life. You can change “ticket broker” above to bankers, insurance agents, government officials, baristas, etc etc etc.
For some reason, whenever people do business around anything related to art or entertainment, logic goes out the window and emotion starts to take over. People think they have the *right* to something at less than market value (have you stolen music recently?). Well, sorry, Adam Smith’s invisible hand will dominate, one way or another. I welcome the transparency of the secondary ticketing market over dealing with a creepy dude in a hoody standing on a corner.
And one last point – yes, markets do not always work. This is when the cost of the externalities created by the market outweigh the collective benefit provided by the market. This is the case in the current US healthcare system. It’s the flaw in the “vouchers” idea pointed out elsewhere in the comments above. One could argue similarly for the current financial mess we’re in and the role the banking/finance industry played in it. These are important issues that directly affect the lives of Americans and (arguably) the well-being of the world economy. I hardly think issues as weighty as these compare to the overall affect the music industry has on people’s well-being … and, even with that, the externalities created by secondary ticketing and dynamic ticket prices are IMO are far less expensive than the benefit offered to the market.
“Reznor wants to kill the secondary ticket business, which is very noble and no doubt popular with his fans. But what he doesn’t talk about is the fact that with any scarce good a market price develops, and there is no way to avoid it.”
Gee, what would a groovy rock star do. Quiz Time!
a) Advise his fans to obtain a copy of “economics In One Easy Lesson”
or
b) Engage in some feel-good moral posturing
Hmmm…toughy…
thats right. but if he picks b) there might be someone with a lot of readers who will expose the posturing. what Confucius said is correct as well. people are just arguing that it is wrong.
I don’t agree with scalpers. I don’t mind punters flipping on tickets they don’t need anymore, but someone who buys up in bulk purely to raise the price is just unfair.
They need to add some value to the ticket – the supermarket analogy is defunct because supermarkets DO add some value. They collect, wash, prepare and package food from farmers who live miles out in the countryside. And then they add a very small percentage to the overall price.
Scalpers often sell tickets for 5-10 times the price without adding any value at all. For anyone that says, “You wouldn’t be able to get those tickets because the event is sold out”… well, the event might not be sold out if scalpers couldn’t buy tickets.
We’re arguing that it’s wrong, and Michael is arguing that it’s inevitable. Which is true.
So… why don’t artists put a system into place to stop scalpers? Stamp every ticket sold with the identity of the buyer, and require proof of ID on entry. Approved sellers can work their magic, and scalpers are stopped in their tracks – they can’t buy tickets because they don’t know who’s hands they’ll end up in.
Why more artists don’t do this, I’ll never know.
You obviously have never bought tickets from me when I’ve sold for 90% off the face value and took a killing. It happens alot too.
If you stamped a ticket with the identity of the buyer you’d run into a ton of issues.
1) It does not allow for changes in plans. If you buy and can’t attend you lose the money.
2) Many people aren’t going to buy that far in advance unless they are sure they can attend or unload the tickets if they can’t. Tickets will sit for sale longer if constraints are put on them.
3) Once everyone figures out that tickets will sit for longer, there is no incentive to buy early and venues will be stuck with huge amounts of unsold inventory right up until the event date. A freak storm or bad weather comes in, no one goes, and they make nothing.. they don’t want that.
4) Approved sellers? How could you ever enforce that in this day in age?
5) Cost – if you put a name on the ticket you have to verify the name on the ticket upon entry. Longer lines to get in, shows starting later than planned, inconvenience to all. Plus who actually goes to the venue knowing exactly who will go with them 6 months in advance?
1) You get a refund? Each ticket would have an ID/barcode, which can be invalidated when the refund is issued.
2) See 1. I don’t have to “unload”, I can just get a refund and open the spot up for someone else at the same price.
Besides, who says anything about buying 6 months in advance? If I knew I had a much higher chance of getting a seat (since scalpers can’t buy up most of them), I could wait till nearer the event.
With that said, tickets may sell out just as fast because people know they’re not going to be beaten to it by scalpers… so basically, time has nothing to do with it.
3) See 2. Putting names on them has NOTHING to do with the real demand of fans whose hands the tickets eventually end up in.
4) An artist might use a third party like TicketMaster to issue the tickets rather than setting up their own billing system. TicketMaster would then become an “approved seller” and would take care of issuing, refunds and taking names for the tickets.
5) Longer entry lines.. perhaps. But, I think a massive proportion of fans would be happy to wait an extra 10 minutes to save 4-5 times on the ticket price. Plus, this isn’t really a problem with the ticketing, more a problem of the venue’s entry system. If they can open more doors, come up with barcode scanners and so on, speed of entry won’t be a problem.
O.k. You seem smart. I would like to see how you respond to this. I like the supermarket analogy because They do collect the tickets, and Michael pointed out the actual benefit to the artist with respect to providing a bit of a guarantee of minimum sales. Plus, one time I was running late to a show that was not sold out and my date wanted to see the first band but the line was long so I got 2 tickets from a scalper and walked right in. one time prince had a concert and you had to go and get tickets personally, during the day for like $50 bucks. yeah, that sucked. day off of work and a 4 hour line. I spent the whole time behind this baby crying, trying to use the force to manifest a scalper. had a similar experience trying to get organic vegetables far a lady friends sick aunt on a Wednesday afternoon farmers market. both times scalpers and supermarket seem like kin. Then start talking about unhealthy supermarket practices, sub par wages, and putting beer near the diapers or putting the healthier steevia far away from the less healthy sweeteners and stuff like that and scalpers seem even less evil and more par for the coarse. I’m not saying that any of that is right or wrong, but what do you think?
*cough*paragraphs*cough*…
* Collecting tickets – but there’s no additional benefit to the consumer. They have to be posted the ticket or pick it up on the door whoever they buy it off.
* Guaranteeing minimum sales is fair enough. But this is a problem with the artist and their promotion methods. If they price tickets fairly and advertise them properly, they should have no trouble selling out.
Obviously this is a bit simplified and I take your point, but I do think selling the tickets should be up to the artist/promoter at the end of the day.
* Convenience – sure, some of the time it is more convenient to buy a ticket from a scalper. But if you know you’re going to the concert, why not buy them in advance for a much lower price? Or turn up on time? Is it so hard to do either of those when you could save 4-5 times the price you’d pay a scalper?
* As for queueing.. well you’re right. That’s a rubbish way to sell tickets. It’s up to the artist/promoter to offer better ways. They could easily have run a premium rate phone line for people who didn’t want to wait. The point is that scalpers are only filling a need that isn’t satisfied by the original ticket vendors.
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Generally, I’d only advocate name-stamping tickets for big events with high demand. Let the artists set the price, and sell direct to the fans. There is no NEED for middlemen. All they do is inflate the price.
I’m not arguing that it WON’T happen, but that it SHOULDN’T, and artists shouldn’t let it. We shouldn’t be blaming scalpers – good for them! They’ve spotted a money making opportunity and are going for it. We should be blaming artists and promoters for not providing a proper service to their customers.